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P-notes investment jumps to Rs 76,773 crore at October-end

The share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) has jumped to Rs 76,773 crore at the end of October from Rs 76,611 crore at September-end. Before registering gain in October, investments through P-notes had been declining continuously since June. At the end of August, the Indian capital market saw a total inflow of Rs 79,088 crore through P-notes, a drop from Rs 81,082 crore till July-end. The investment had stood at Rs 81,913 crore at June-end and Rs 82,619 crore at the end of May.

According to the latest data from the Securities and Exchange Board of India (SEBI), the total value of P-note investments in the Indian markets – equity, debt, and derivatives – increased to Rs 76,773 crore at October-end. Of the total investments made till the end of October, Rs 52,753 crore was invested in the equities, Rs 23,316 crore in debt and Rs 704 crore in the derivatives segments. The use of P-notes has been on a decline since 2017 and slumped to a nine-and-a-half year low of Rs 66,587 crore at the end of October last year.

P-notes are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be part of the Indian stock market without registering themselves directly after going through a due diligence process. In July 2017, markets regulator SEBI had notified stricter P-notes norms stipulating a fee of $1,000 that will be levied on each instrument to check any misuse for channelising black money. It had also prohibited FPIs from issuing such notes where the underlying asset is a derivative, except those which are used for hedging purposes.

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